10% increase in skilled job opportunities - Department of Labour report

OCTOBER 20, 2014

Despite the stubbornly high unemployment rate, there was an overall increase of job opportunities from 44 611 to 49 001 vacancies captured during the financial year 2013/14 – pointing towards a skills shortage in the South African labour market in the financial year 2013/14.

According to the Department of Labour Job Opportunities and Unemployment in the South African Labour Market Report 2013-2014 the results show the potential imbalances between the demand for and supply of labour in terms of skills mismatches in the country. It is argued that one of the challenges is that there is a misalignment between the skills possessed by the job seekers and the skills required by employers.

The rise in job opportunities represents almost 10% increase in the number of vacancies advertised in the country. However, this increase still cannot match the stubborn high unemployment rate of 25.2% in the South African labour market by March 2014. Thus, the triple-challenge of poverty, unemployment and inequality is still persistent in the country.

This report examines the labour market trends using the following data sources: job opportunities advertised in various newspapers, Unemployment Insurance Fund (UIF) claims for people who have applied for Unemployment Insurance Benefits for the reason of being unemployed as processed by the Department of Labour and Quarterly Labour Force (QLFS) produced by Statistics South Africa (Stats SA).

Despite the Government efforts in trying to reduce unemployment, South Africa has still maintained a high unemployment rate at 25.2% and an overwhelming youth (15-34 years) unemployment rate during January to March of 2014.

Overall, there is not much improvement in the South African labour market. While more than 200 000 people reported to be unemployed, job creation was also minimal as more than 120 000 jobs were lost between March 2013 and March 2014 (year-on-year changes). The increase in the number of long and short-term unemployed was more than 200 000 individuals in both quarter-to-quarter and year-on-year changes. This is almost 4.7% growth between quarter four of 2013 and quarter one of 2014. In other words, these labour force trends require much attention from the South African Government in line with the implementation of the NDP in future.

Educational attainment is used as another proxy variable that can explain the skills level of the unemployed. Better job opportunities might require high educational attainment. The official statistics show that 46.3% of the unemployed people from January to March 2014 did not complete secondary school. While there is an improvement in all educational categories amongst the unemployed people, it is still a concern that few (52 000) unemployed people have attained tertiary education between quarter four of 2013 and quarter one of 2014.

The Job Opportunities and Unemployment in the South African Labour Market 2013-2014 Report says employment creation remains the most significant challenge to long-term economic stability and growth. The report has also noted that employment creation was mostly concentrated in the public sector. The slow recovery in the private sector employment should also be another concern for the South African Government.

Community, social and personal services supplied the highest number of job opportunities of 33 452 (68.3%) during the financial year 2013/14. The Financial industry was the second industry sector with 5 586 (11.4%), the third being mining with 2 098 (4.3%). The industry that recorded the lowest number of vacancies was Private households with 181 (0.4%), followed by Utilities with 572 (1.2%) and Agriculture sector with (1.9%).

Corresponding movements in the labour market were also observed from the Unemployment Insurance claims. Applying for unemployment benefits becomes an indication of a job loss. The Department of Labour keeps a database of the applications varying from applications created, approved and rejected. UI claimant counts indicates the following patterns of 5.3% increase between quarter one and two, decrease of 27.3% between quarter two and three and 7.1% increase between quarter three and four in the financial year 2013/14. In totality, 589 038 UI claims were created in the financial year 2013/14. The lowest UI claimant count was in quarter three (123 825) and the highest was in quarter two (170 577) over the same period.

By province, Gauteng is the province that has reported the highest number of UI claims (145 556 (25%), followed by KwaZulu-Natal (103 579 (18%), Western Cape (16%) and Eastern Cape (10%) province. The rest of the provinces recorded below 10% of UI claims and the lowest claiming province was the Northern Cape with 3.6% UI claims over the same period.

The large proportion of ordinary claims was received from those unemployed people with below grade 12 educational attainment. The most critical challenge leading to most people losing jobs, is employment contract termination. Dismissal of workers is still predominant in the South African labour market which disproves the argument that the South African labour laws are too rigid in terms of hiring and firing aspect” argues the report.

In conclusion, the report underlines that the challenges as identified in the National Skills Development Strategy still persist. These include:

  • Inadequate skills levels and poor work readiness of many young people leaving formal secondary and tertiary education and entering the labour market for the first time.
  • Continuing skills shortages in the artisanal, technical and professional fields that are fundamental to the development and growth of our economy.
  • The failure of business in many sectors of the economy to equip their workforce to adapt to change as the economy becomes more knowledge-based.
  • The absence of coherent strategies within economic and industrial sectors, compounded by the lack of systematic skills development to support and sustain growth and development.
  • The urban bias of our economic development and therefore the urban bias of our skills development initiatives, resulting in skills for rural development being neglected.

Ensuring that the skills of the unemployed are adapted to those low-performance industries is also critical for long-term productivity and economic growth in the country,” the report stressed.